2013 (11) TMI 1523 - CGOVT - Central Excise

Denial of rebate claim - 4% SAD is not specified as duty which is eligible for rebate claim under Notification No. 21/2004-C.E. (N.T.), dated 6-9-2004 - Held that - SAD is levied on imported goods to counter balance the sales tax, value added tax, local tax, etc., which cannot be considered as duty of excise for being eligible for rebate benefit. Further, SAD collected under Section 3(5) is not classified as a duty in list of duties provided in Explanation-1 of the Notification No. 21/2004-C.E. (N.T.). Hence, such payment of SAD is not eligible for rebate claim in terms of the provisions of Notification 21/2004-C.E. (N.T.), dated 6-9-2004 - The clause (i) of said explanation covers the Additional Duty of Customs levied under Section 3 of CTA. This entry cannot be construed to include Special Additional duty especially when it is levied to counter balance sales tax, VAT, local tax, etc. The final export product is an exempted product and applicant has paid no excess duty while clearing goods for export and therefore there is no question of allowing re-credit in Cenvat credit account of any voluntary paid amount - Commissioner (Appeals) has rightly upheld the rejection of rebate claim - Decided against assessee.

Summary

Issues:
Claim for rebate of Special Additional Customs Duty paid on imported raw material for manufacturing an exempted final product.

Analysis:
The case involves a revision application filed against an Order-in-Appeal regarding the rejection of rebate claims for Special Additional Customs Duty (SAD) paid on imported raw material. The applicant manufactured Praziquental Tablets 600 mg using imported raw material and filed rebate claims under Notification No. 21/2004-C.E. The original authority rejected the claims, leading to an appeal before the Commissioner (Appeals), who partially allowed the rebate claim. The applicant then filed a revision application before the Central Government citing Rule 3, sub-rule (viia) of CENVAT Credit Rules, 2004, arguing for the allowance of Cenvat credit for SAD paid. The applicant also relied on a previous judgment with similar circumstances.

The Central Government analyzed the case records and noted that the applicant imported raw material paying SAD under Section 3(5) of the Customs Tariff Act, 1975, used in manufacturing the final product for export. The original authority rejected the rebate claim citing ineligibility of SAD for rebate under the relevant notification. The Commissioner (Appeals) modified the order, allowing a partial rebate claim for excise duty on indigenously procured materials. The Central Government emphasized that SAD is levied to counterbalance local taxes and is not considered excise duty for rebate purposes.

The Central Government further clarified that SAD under Section 3(5) does not qualify as a duty of excise under the notification, making it ineligible for rebate claim. The judgment highlighted that the exported final product was exempted from excise duty, thus no re-credit was warranted. The Commissioner (Appeals) correctly upheld the rejection of the rebate claim, and the Central Government found no fault in the decision. Consequently, the revision application was dismissed for lacking merit.

In conclusion, the Central Government affirmed the decision of the Commissioner (Appeals) and rejected the revision application, maintaining that SAD paid on imported raw material for an exempted final product does not qualify for rebate under the relevant provisions.